Islamabad: US President Barack Obama and his Pakistani counterpart Asif Ali Zardari on Thursday agreed to take ‘appropriate steps’ to repair relations between the two countries, which were affected by last month's covert American raid that killed Osama bin Laden.

Obama telephoned Zardari, who was in Karachi on Wednesday night to discuss bilateral ties and the situation in the region, an official statement said.

The two leaders agreed to "take appropriate steps to repair the ties between the two countries on the basis of mutual respect and mutual benefit".

The US President appreciated Pakistan's efforts in the fight against militancy.

Zardari said the fight against extremism was "Pakistan's own and it had to fight it to the finish in its own national interest".

The two leaders agreed to have "regular contacts and interaction at appropriate levels for the the solution of issues," the statement said.

Pakistan-US ties have been buffeted by several incidents this year, including the shooting and killing of two Pakistani men by CIA contractor Raymond Davis in January 27 and the US raid that killed al Qaeda leader bin Laden in the garrison city of Abbottabad on May 2.

Islamabad virtually cut off its defence and intelligence cooperation in the wake of the raid against bin Laden and told Washington to cut the strength of American military personnel deployed in Pakistan.

Pakistan has also demanded that the US should stop drone strikes in its tribal belt bordering Afghanistan.

In recent weeks, the two sides have taken tentative steps to improve relations with an eye on US plans to cut down troop strength in Afghanistan.

Pakistan is also jockeying for a greater role in talks with the Afghan Taliban to find a political settlement in Afghanistan.